Shaping Nascent Industries: Innovation Strategy and Regulatory Uncertainty in Personal Genomics

In nascent industries—whose new technologies are often poorly understood by regulators—contending with regulatory uncertainty can be crucial to organizational survival and growth. Prior research on nonmarket strategy largely focuses on established firms in mature industries operating in novel domains where the rules of the game are underdeveloped, though such strategies are apt to differ for new ventures with limited resources and market power. How do ventures navigate regulatory uncertainty? To explore this question, we conduct an inductive multi-case research study in the nascent personal-genomics industry. Drawing on 86 interviews and extensive archival and qualitative data, we develop a theoretical framework that elucidates how ventures navigate regulatory uncertainty—specifying the range, content, and sequence of actions that ventures take to manage this uncertainty. The framework, organized around the sequential processes of anticipating, reacting to, and shaping regulations, introduces a novel logic of interaction—regulatory co-creation—that ventures can employ to shape emerging regulations. Taken together, our theory and findings challenge existing perspectives on strategy in nascent markets and shed new light on the dynamic interplay between ventures and regulators during the emergence of new technology industries.